Purbaya: Cutting VAT to 8% Could Lose Hundreds Trillions Rupiah

Finance Minister Purbaya Yudhi Sadewa told the 100 Indonesian Economists Forum in Jakarta on 29 October 2025 that cutting the VAT rate from 11% to 8% could reduce state revenue by hundreds of trillions of rupiah. He noted that each 1‑percentage‑point reduction may cost about Rp70 trillion in revenue.

Although he previously supported the 8% proposal, Purbaya now says any decision must be backed by thorough analysis. The Ministry of Finance will assess tax collection capacity after a six‑month overhaul of tax, customs and excise administration, with effects expected from early 2026.

This approach allows the government to estimate the revenue gap and evaluate its impact on national economic growth. The cautious stance postpones a VAT rate change and shifts attention to improving the tax system.